We already know that obesity is a growing problem among adults in our country, with more than a third considered obese, according to the Centers for Disease Control and Prevention. What we often gloss over, though, is that obesity among children in the U.S. is just as concerning. With most adults seemingly reluctant to drastically alter their lifestyles enough to curb adult obesity, the importance of educating children early in their life about proper diet, exercise, and other obesity risk factors has taken on an entirely new meaning.
With obesity now officially a disease according to the American Medical Association, pharmaceutical research into controlling symptoms and diseases that arise with obesity, as well as educating kids about the lifestyle choices they can make to stay healthier, is only expected to increase. However, not all U.S. states are created equally when it comes to battling the bulge in kids.
Released last month, F As in Fat, an annual report (links opens a PDF file) compiled by the Robert Johnson Wood Foundation and Trust for America's Health, outlined the staggering proliferation of obesity within today's youth. Not only does the report list some of the mind-numbing tangible and intangible costs associated with childhood obesity, but it also highlights seven U.S. states with childhood obesity rates that are far and away higher than the U.S. average.
The economic cost of childhood obesity
Before we dive into which states earned the dubious honor of having America's most obese kids, let's first turn our attention to the economic costs of childhood obesity and what risk factors exist that might lead children to become overweight or obese.
According to the report, between 1963-1965 and 2007-2008, the rate of obesity among 6- to 11-year-olds has jumped almost fourfold to 20%. The jump in 2- to 5-year-olds isn't much better, with a threefold increase to nearly 20% from 1966-1970 through 2007-2008.
Why does this matter? To begin with, obesity can lead to a number of health problems, including diabetes, hypertension, and high cholesterol just to name some of its more severe risk factors. The study concludes that 40% of all obese youth exhibit at least two major risk factors for developing cardiovascular disease.
But in addition to its effects on the body, obesity has negative effects on the health-care system as a whole. Between 2001 and 2005, childhood obesity-related hospitalization costs practically doubled, from $125.9 million to $237.6 million (using inflation-adjusted 2005 dollars). Furthermore, the average cost to treat an obese child under Medicaid averages 175% higher annually ($6,730) than the cost to treat the average child ($2,446).
What leads to childhood obesity?
According to the Mayo Clinic, there are six factors that most commonly cause children to become overweight:
- What they eat.
- Socioeconomic factors.
- Family history.
- Lack of exercise.
- Family oversight.
- Psychological factors.
The most obvious factor here is that kids aren't eating the right foods. Diets that are high in saturated fats, salt, and cholesterol are causing our nation's youth to grow outward instead of upward. However, not everything can be traced back to an improper diet. Sometimes family income can be an issue. It can be difficult to provide healthful choices for lower-income families where fast-food restaurants may seem like the only option. Family oversight of a child's eating habits can also play a role. Children need to be taught right from wrong, and if their guardians aren't there to show them how to eat properly, it's likely they will choose the wrong foods. Kids also tend to emulate what they see. If adult obesity runs throughout the family, or a child's family lives a fairly sedentary life, they, too, are likely to become obese and fail to get an adequate amount of exercise.
The seven U.S. states with the highest childhood obesity rates
This leads us to the worst-offenders list: the seven U.S. states with the highest childhood obesity rates for children aged 10 to 17. They are (excluding the District of Columbia):
- Mississippi (21.7%)
- South Carolina (21.5%)
- Louisiana (21.1%)
- Tennessee (20.5%)
- Arkansas (20%)
- Arizona (19.8%)
- Kentucky (19.7%)
With the exception of Arizona, there's a definitive bias toward the South. Arizona's high childhood obesity rate could be in direct relation to its harsh weather conditions (i.e., it's a bit difficult to get kids outside to exercise when its 110 degrees!). The remaining six states, though, do exhibit trends that make them clear candidates for high childhood obesity. The culture in many of these states revolves around high-fat-content foods. In addition, many of these states rank at the bottom of the median household income ladder. Mississippi, Arkansas, and Tennessee, in fact, are first, second, and third lowest in median household income, which severely limits food choices for these families.
What's being done to combat childhood obesity
The obvious first step in countering childhood obesity is in making sure kids are eating more nutritious foods and that they're staying active.
Tackling the subject of proper nutrition for our nation's youth means having to battle the bulge in our schools and at home. Within our nation's schools, 34 states have enacted a snack and/or soda tax, with 19 states going above and beyond the nutritional requirements as set forth by the U.S. Department of Agriculture.
But where we're really seeing the need for more nutritious foods take hold is in the fast-food and casual-dining industry. McDonald's may have been the progenitor of healthier food options in fast-food restaurants with salads and snack wraps, but it's completely ceded that crown to up-and-comers such as Chipotle Mexican Grill (NYSE: CMG). For roughly the same price as a burger-and-fries combo from a fast-food establishment, Chipotle is offering customers fresh-Mex food complete with freshly grown local vegetables and meats that are antibiotic and hormone free under its "Meat With Integrity" pledge. As consumers look for ways to put better foods in front of their kids without expanding their wallet, Chipotle could continue to come out a big winner.
Proper nutrition is just one part of the equation; keeping kids active is another challenge. One big partner in this effort is action sports footwear and accessories maker Nike (NYSE: NKE). In February, Nike announced a $50 million, five-year commitment to a program called "Let's Move! Active Schools" to get children to incorporate physical activity into their everyday lives. The partnership for Nike has the dual benefit of helping America's youth stay in shape and potentially adding to its bottom line, since its products are geared toward adults and kids who lead an active lifestyle.
When proper diet and exercise aren't enough
For children, who often have more energy and faster metabolisms than adults, proper diet and exercise can trigger weight loss or, at worst, keep additional pounds from being added in a majority of cases. However, in scenarios where traditional diet and exercise methods aren't enough, adjuvant therapies may be needed.
As you might have already anticipated, there are very few medications available to children to help control their weight or the symptoms that accompany being overweight or obese. In terms of weight management, only one medication is approved for adolescents as young as 12 years of age: Roche's (NASDAQOTH: RHHBY) Xenical. This drug works by blocking fat absorption in the intestines, thus allowing users to benefit in conjunction with a proper diet and exercise to lose weight. Unfortunately, Xenical also comes with some fairly serious potential side effects, which can include liver and kidney problems. Because of these harsh potential side effects, sales of the drug have never taken off.
There is a possibility that newly approved weight-management drugs Belviq by Arena Pharmaceuticals (NASDAQ: ARNA) and Qsymia by VIVUS (NASDAQ: VVUS) may eventually become an option for extremely obese children, but as of yet neither is approved to treat anyone under age 18. The reason I even bother mentioning Belviq and Qsymia is that both offered a more favorable safety profile than Xenical, as well as exhibited more profound weight-loss results in adults. It's quite possible these results could translate into success with adolescents as well, but the big question would be whether either company would spend the money on clinical trials to market to such a small audience, and if the strict FDA would even grant such an approval.
Ultimately, the clear takeaway here is that the war against childhood obesity is fought most often within the confines of schools and the household, rather than through a pill bottle as we see in some cases of adult obesity. As an investor, this means companies such as Chipotle, which are focused on delivering value pricing while sticking to more nutritious foods, and Nike, which is partnering with schools to keep kids moving and to simultaneously promote its own action sportswear, are clear beneficiaries. We could eventually see Arena or VIVUS's anti-obesity drugs in the fray for adolescents as well at some point in the future, but I believe it would take a sizable jump in adolescent obesity to make it cost-effective enough for these companies to run additional safety trials and for the FDA to feel a weight-management drug was necessary for children.